Cargill: Follow the Beans from Pacific Northwest to China

cargill

By Lisa Clemens

The town of Holdrege was settled by pioneers in 1883, about 160 miles west of Lincoln, Nebraska. Today, a Cargill grain elevator stands tall over the flat countryside nearby.

It’s from here that soybeans destined for China begin their 7,000 to 8,000 mile journey across land and sea to arrive on the other side of the world, helping to feed Asia’s growing middle class.

As incomes have risen across Asia, people there have improved their diets, including eating more meat. China’s increasing consumption of animal protein has fueled the demand for soybeans, as soybean meal is a key ingredient in animal feeds. In 2004, China imported 9.4 million metric tons of soybeans from the U.S. By 2014, its U.S. soybean imports had more than tripled to 31.3 million metric tons.

“Certain places, such as Nebraska, are endowed with the water, sunlight and soil needed to grow an abundance of food crops, whereas other geographies are in need of those crops,” said Emery Koenig, vice chairman and chief risk officer for Cargill.

“Moving grains and oilseeds from places of surplus to places of need is what Cargill does best.” 

Over the past four years, Cargill has made many investments to provide farmers in the interior of the U.S. with better access to Asian markets via the Pacific Northwest, a growing export channel.

One of the largest outlays made in origination was the $32 million expansion of the elevator in Holdrege.

“Farmers in this area are highly productive,” said Robert Racek of Cargill AgHorizons. “They are increasing the size of their operations and investing in more acres and more equipment for faster harvesting and trucking.

We needed to invest in the facility to keep up with their output.”

The transformation was striking: new truck receiving pits for a combined 80,000-bushel-per-hour unload capacity; a revamped truck staging area with inbound and outbound scales; a high-volume grain dryer; nine bins that raised storage capacity to 5 million bushels from 1.5 million; the ability to load a shuttle train with 440,000 bushels of grain in less than 10 hours; a new office and grading lab, and more.

Shane Westcott, who owns and operates a 2,000-acre farm in the Holdrege area, said having no wait time is important to him because it limits the number of trucks he needs to manage and keeps his combine rolling. He described the new facility as the best economic development opportunity for local farmers.

“Opening up a different market to consume what we grow here is a very good thing, not only for me, but for all the farmers in the area,” he said.

“Having an operation like this in Holdrege probably added another 10 cents of value to every bushel that was sold in the area. That’s very positive for our community, all the way through.”

When the soybeans leave Cargill’s Holdrege facility by rail, they make their way to Cargill’s grain export facilities in the Pacific Northwest of the United States. Cargill’s export presence in the Pacific Northwest is through TEMCO, a 50-50 joint venture with CHS, a farmer-owned Fortune 100 company.

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A Panamax vessel is berthed at a Cargill joint venture export terminal in Tacoma, Washington

“Almost 40 percent of U.S. soybean exports to China pass through grain terminals situated in the Pacific Northwest,” said Bill Hale, Cargill export grain manager and TEMCO board member. “It’s the fastest, most direct route.”

When a soybean-laden Panamax pulls away from TEMCO’s dock, the sale that prompted the voyage was made some time ago by Cargill’s merchandising team in Shanghai.

That team buys the soybeans that are imported for processing at Cargill’s crush plants in Nantong, Dongguan, Yangjiang and soon, Huanghua, China.

The team markets the protein-rich meal to animal feed manufacturers and distributors, hog and chicken producers, and other Cargill businesses in China.

From purchase to crush, the pipeline to China is two months long.

When a ship is at the dock in Tacoma, it was generally chartered before it left countries such as China or Japan. It arrives empty, carrying fuel and ballast water only.

Cargill monitors the vessel during the entire trip, ensuring it complies with all regulations and working with the terminal to make the loading process as smooth as possible.

The crossing takes about 18 to 20 days each way.

The total duration of the ship’s voyage, including the load and discharge operations, is about 55 days.

It’s a long journey from the soybean fields of south central Nebraska to the pork and chicken served on dinner tables in Asia.

And it’s the strength of the “pull” exerted by China’s demand for soybeans that threads the supply chain all the way back to the U.S. interior and beyond.

No matter where they sit in the world, Cargill people take enormous pride in being part of this vital supply chain. “All of us get a lot of personal satisfaction from taking grain from point A to B, where it’s needed. Being an integral part of that chain is very gratifying,” said logistics manager Kevin Kohler.

Credit: CARGILL

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